Identify the principal and interest payment of each month

Assignment Help Finance Basics

Reference no: EM131878660

Section 1: TVM basics

1. Suppose a State of Texas bond will pay $5,000 ten years from now. If the going interest rate on these 10-year bonds is 2.0%, how much is the bond worth today?

2. Suppose you have $1,000 and plan to purchase a 10-year certificate of deposit (CD) that pays 2.0% annual interest, compounded annually. How much will you have when the CD matures?

3. Suppose you have $1,000 and plan to purchase a 10-year certificate of deposit (CD) that pays 2.0% annual interest, compounded quarterly. How much will you have when the CD matures?

(Hint: You need to convert the annual interest rate 1.2% into the quarterly interest rate, and convert 15 years into 10*4=40 quarters to get correct answer).

4. Suppose you have $1,000 and plan to purchase a 10-year certificate of deposit (CD) that pays 2.0% annual interest, compounded monthly. How much will you have when the CD matures?

(Hint: You need to convert the annual interest rate 1.2% into the monthly interest rate, and convert 15 years into 10*12= 120 months to get correct answer).

5. Suppose the U.S. Treasury offers to sell you a bond for $880.00. No payments will be made until the bond matures 7 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price?

Section 2: Loan Amortization

1. Construct an amortization schedule for the $400,000 loan with a 3.25% interest rate compounded monthly. The loan will be paid back in 15 years making monthly payments.

Identify the principal and interest payment of each month.

Hint: Please use the excel file of "Loan Amortization "posted in Unit 4 "Lecture". Also, please make sure you will "modify the loan amortization model" to 15 years as required.

2. Construct an amortization schedule for the $400,000 loan with a 3.75% interest rate compounded monthly. The loan will be paid back in 30 years making monthly payments.

Hint: Now you need to "modify the loan amortization model" to 30 years as required.

Attachment:- Assignment Files.rar

Reference no: EM131878660

Questions Cloud

Properly describes gaap accounting for derivatives : Which of the following statements properly describes GAAP accounting for derivatives?

Advantages when delivering the bad news by email : What are some of the advantages when delivering the bad news by email?

Discuss about the structure of the organization : Identify the main types of traditional and horizontal organization structure. Using an organization of your choice as an example.

What is a more effective means of coercion : What is a more effective means of coercion against a threat of military action? Is there an example I can use?

Identify the principal and interest payment of each month : Construct an amortization schedule for the $400,000 loan with a 3.25% interest rate compounded monthly. Identify principal and interest payment of each month

Identify an organizational-level goal : Identify an organizational-level goal that would be incorporated into an annual business strategy.

To pay the balance of the purchase price : To pay the balance of the purchase price, she has secured a loan from her bank at the rate of 5%/year compounded monthly.

Identify an organization various options as defined : Identify an organization's various options as defined, for example, in the "Real Options Navigator" article, that have potential to create value.

What will nancy recognize for federal income tax purposes : What will Nancy recognize for federal income tax purposes on her 2017 federal income tax return?

User Account

All Pages